Despite macroeconomic challenges, the biotech industry has been performing relatively well. Government initiatives, rapid technology breakthroughs, and inelastic demand for healthcare are fostering the growth of the biotech industry.
So, investors could consider buying shares of Gilead Sciences, Inc. (GILD) and Vertex Pharmaceuticals Incorporated (VRTX) in March, which should generate stable returns despite the market uncertainties.
The Biden administration announced a $2 billion investment in biotech and biomanufacturing efforts, with the Department of Defense allocating $1 billion, mostly for manufacturing facilities in the United States.
Furthermore, the global biotechnology market is expected to grow at a CAGR of 7.7% until 2026. Increasing investments in the advancement of regenerative treatments and developments in the areas of artificial intelligence are driving the market’s growth.
Investors’ interest in biotech stocks is evident from the iShares Biotechnology ETF’s (IBB) 8.8% gains over nine months.
Let’s discuss the stocks mentioned above in detail.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally for over three decades.
On February 22, 2023, Kite, a GILD company, acquired Tmunity Therapeutics, a clinical-stage biotech startup focused on next-generation CAR T-therapies and technology.
This acquisition should strengthen Kite’s in-house cell therapy research capabilities by delivering pipeline assets, platform capabilities, and a unique partnership with the University of Pennsylvania.
GILD’s trailing-12-month gross profit margin of 79.26% is 42.4% higher than the industry average of 55.66%, while its trailing-12-month EBITDA margin of 47.93% is substantially higher than the industry average of 3.39%.
For the fourth quarter that ended December 31, 2022, GILD’s total revenues came in at $7.39 billion, up 2% year-over-year. Its adjusted operating income increased 79.1% from the year-ago value to $2.70 billion. Its non-GAAP net income attributable to GILD and non-GAAP EPS came in at $2.11 billion and $1.67, up 143.2% and 142%, respectively.
GILD’s revenue is expected to increase 2.1% year-over-year to $27.27 billion in 2024. Its EPS is expected to grow 5.7% year-over-year to $7.22 in 2024. It surpassed EPS estimates in all four trailing quarters. GILD’s shares have gained 29.7% over the past years to close the last trading session at $77.81.
GILD’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GILD has an A grade for Growth and Value and a B for Sentiment and Quality. Within the Biotech industry, it is ranked first among 385 stocks. Click here for the additional POWR Ratings for Stability and Momentum for GILD.
Vertex Pharmaceuticals Incorporated (VRTX)
Biotechnology company VRTX develops and commercializes therapies for treating cystic fibrosis.
On March 9, 2023, VRTX announced that the US Food and Drug Administration (FDA) approved the Investigational New Drug Application (IND) for VX-264 to treat type 1 diabetes (T1D). Because this application does not require the use of immunosuppression, it has the potential to reach a larger group of patients with T1D.
VRTX’s trailing-12-month gross profit margin of 59.60% is 7.1% higher than the industry average of 55.66%, while its trailing-12-month EBITDA margin of 50.69% is substantially higher than the industry average of 3.39%.
VRTX’s net product revenues came in at $2.30 billion for the fourth quarter that ended December 31, 2022, up 11.1% year-over-year. Its non-GAAP net income increased 25.9% year-over-year to $978 million, while its non-GAAP EPS came in at $3.76, up 24.5% year-over-year.
Analysts expect VRTX’s revenue to increase 8.7% year-over-year to $9.71 billion in 2023. Its EPS is expected to rise 5.8% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 18.3% to close the last trading session at $297.87.
It’s no surprise that VRTX has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B for Value, and Sentiment.
VRTX is ranked #4 in the same industry. Get additional POWR Ratings for VRTX (Momentum, Stability, and Growth) here.
Consider This Before Placing Your Next Trade…
We are still in the midst of a bear market.
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GILD shares were trading at $78.65 per share on Thursday afternoon, up $0.84 (+1.08%). Year-to-date, GILD has declined -7.51%, versus a 4.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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|VRTX||Get Rating||Get Rating||Get Rating|